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Drawdown

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Drawdown
A measure of a losing period during an investment record.
    
It is calculated as the percent change from a price peak to trough. This used as a measure of Risk. It is any losing period during an investment record. It is defined as the percent retrenchment from an Equity peak to an Equity valley. A Drawdown is in effect from the time an Equity retrenchment begins until a new Equity High is reached (i.e. In terms of time, a drawdown encompasses both the period from Equity peak to Equity valley (Length) and the time from the Equity valley to a new Equity High (Recovery ).
    
When a Venture capital firm has decided where it would like to invest, it Will approach its own investors in order to draw down the money.
    
Drawdown is the peak to trough decline during a specific record period of an investment or fund. It is usually quoted as the percentage between the peak to the trough.

The money Will already have been pledged to the fund but this is the actual act of transferring the money so that it reaches the investment target.
    
In finance, the use of the maximum drawdown as an indicator of Risk is particularly popular in the world of Commodity trading advisors through the widespread use of three performance measures: the Calmar Ratio, the Sterling Ratio and the Burke Ratio.
Posted by  LISA Life Insurance Settlement Association
 
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